Monday, June 03, 2019

Top 10 Reasons Why Stealing From State And Local Public Pensions Is The Perfect Crime

Nov 27, 2017
Top 10 Reasons Why Stealing From State And Local Public Pensions Is The Perfect Crime
Edward Siedle
In my upcoming 2018 book, How To Steal A Lot of Money, I recommend that a successful
thief master the art of finding the perfect victim. Here’s my top 10 reasons for why our nation’s public pensions fit the bill.
1. With assets of over $4 trillion as of Q2 2017, these retirement systems have boatloads of money — a few million, or even billion, stolen won’t be missed.
2. Public pensions are overseen by boards of trustees comprised of laymen utterly lacking any knowledge or expertise in investment or fiduciary matters. Few state or local statutes require public pension board members to meet any minimal standards related to pensions. Time and again, even local hucksters successfully pull the wool over these boards’ eyes. When Wall Street comes-a-calling on public pensions, fuggetaboutit.
3. Public pensions are subject to politicization. The composition of boards and the decisions made by boards regarding pension investments are generally tainted by political considerations. Grease the right politician and you’re in like Flint.
4. While generally subject to state public records laws mandating transparency, these funds are so defensive about the decisions they make and skilled at thwarting public disclosure requirements that a scammer need not be concerned about being exposed.
5. Public pensions are not subject to the Employee Retirement Income Security Act of 1974 (ERISA), the federal law that establishes minimum standards for pension plans in private industry. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure of financial and other information concerning the plan to beneficiaries; establishing standards of conduct for plan fiduciaries; and providing for appropriate remedies and access to the federal courts. Since ERISA doesn’t apply, a would-be thief need not be troubled by any of the preceding.
6. Public pensions are regulated by a thin patchwork quilt of state and local laws. Many of the most significant issues related to managing pensions are unanswered in these statutes. Anything that’s not clearly illegal under applicable law, can probably be gotten away with.
7. No federal or state regulator, or law enforcement agency, is policing these plans for criminal activity. No worries about the Department of Labor or FBI and even state Attorneys General are reluctant to get involved due to political concerns mentioned above.
8. Many public pensions are not audited annually by independent certified public accountants. State auditors lacking expertise in complex foreign investment schemes may not be up to the task of ferreting out wrongdoing.
9. Ever-growing percentages of public pension assets are being swept into offshore accounts and illiquid, hard-to-value assets. Nobody’s checking to see if the money is even really there.
10. As long as taxpayer rage continues to focus upon the amount of money flowing into public pension plans and the supposedly “rich” benefits they pay to state and local retirees, investment scamming related to the pension portfolios will not be a priority.
Trust me, whatever you steal won’t be missed for years to come.
Larry KehresMount Union Collge
Division III
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